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Monday, 29 June 2015

Islamic banking in Uganda

It was not making sense that Ugandans were denied this option to access financing under a different culture.

The most striking thing about strict Islamic banking is the sharing in profit and loss. The customer is never made to feel that they have been victimised in any way.

There is also the Arabic concept of Musharaka and Mudaraba in that the banks share in the risk and future profits of a promising project. This means they stick with you all the way.

I am not saying the western style commercial banks are bad. Simply that in this day and age, having as much options to choose from is good for business people. With Islamic banking, Uganda can now hopefully be of moreinterest to the larger banking names in the Middle East and Gulf States.

I suspect that there are those who have concerns about Islamic banking due to its roots in the Shari’ah law. It is true that some terms are stricter compared to conventional banking, but this is so that no one is unecessarily penalised. It all boils down to removing the burden of interest or Riba and reducing uncertainty (Gharar) to promote economic activity. It sounds confusing, it is a worthwhile alternative to explore.